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DECISION No

DECISION No. 134/2001/QD-TTg OF SEPTEMBER 10, 2001 APPROVING THE OVERALL PLANNING ON THE DEVELOPMENT OF THE STEEL INDUSTRY TILL 2010

THE PRIME MINISTER

Pursuant to the September 30, 1992 Law on Organization of the Government;

Pursuant to the Government�s Decree No. 52/1999/ND-CP of July 8, 1999 issuing the Regulation on investment and construction management and Decree No. 12/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Regulation on investment and construction management,

At the proposal of the Ministry of Industry (Official Dispatches No. 4694/CV-KHDT of December 11, 2000 and No. 2196/CV-KHDT of June 1, 2001) and considering the evaluation report of the State Council for Evaluation of Investment Projects (Official Dispatch No. 7/TDNN of April 6, 2001),

DECIDES:

Article 1.- To approve the Overall Planning on the Development of the Steel Industry till 2010, with the following principal contents:

1. Objectives:

a/ Objectives for the development of the steel industry till 2010:

To develop the steel industry into one of the key industries of the economy; to better and better satisfy the domestic consumption demand, then proceed to the export of steel; to strongly step up production and create many jobs, making an important contribution to the cause of national industrialization and modernization; to raise competitiveness and firmly integrate into the regional and global economy.

b/ Annual average growth rates over the next 10 years� time (in capacity):

- Manufacture of unwrought steel (steel cast): To increase by 15% annually on average;

- Manufacture of rolled steel: To increase by 10% annually on average.

2. Development orientations:

a/ Regarding the investment structure:

To balance the development between downstream activities (rolling, laminating, post-rolling processing) and upstream activities (iron ore extraction, cast manufacture), to step by step strive for a substantial self-supply of steel cast for rolling and lamination. To combine the diversification of product categories and specifications so as to meet the market demand with the selective and rational development of a number of high-quality steel products for mechanical engineering, shipbuilding and automobile manufacture, and special-type steel for defense industry. The development of the steel manufacture and the exploitation and use of domestic natural resources (first of all iron ores) must ensure rationality and effectiveness.

b/ Technologically:

To utilize modern technology and automation at high level, save raw materials, fuel and power, ensure environmental standards in order to be able to manufacture high-quality steel at low costs, with increased productivity, and capable of competing with steel manufactured in the region and world. Selected technologies must be durable and flexible (to be upgraded and modernized when necessary); to replace obsolete, inefficient and environment-unfriendly technologies.

c/ Mobilization of various investment capital sources:

To mobilize all capital sources and all economic sectors to invest in developing the industry, to make a reasonable use of foreign investment (first of all technologies and equipment); to accelerate the development of domestic enterprises engaged in steel manufacture.

d/ Regarding the development of raw material sources:

In the five-year 2001-2005 plan, to concentrate on research so as to get solid and scientific conclusions on the commercial deposits, exploitation capacity and use of domestic iron ores, primarily Quy Xa and Thach Khe iron ore mines. To exploit to the utmost other small iron ore mines for the manufacture of pig-iron, fully exploit the source of domestic steel scraps, and at the same time to seek for stable sources for importing steel scraps for the efficient manufacture of steel cast by electric furnaces.

e/ Regarding markets:

The steel industry shall dominate the domestic market in terms of categories, quality and specifications as well as prices of common-type steel, and be able to find export outlets; step by step meet the needs for steel sheets and plates as well as special-type steel in service of the mechanical engineering. To strive that by 2010 the domestic steel manufacture shall satisfy 75%-80% of the domestic steel consumption demand, of which the Vietnam Steel Corporation (including its proportions in joint ventures) shall represent over 50% of construction steel and around 70% of steel plates and sheets.

f/ Regarding the human resource development:

To attach importance to the training and re-training of the contingents of metallurgical engineers, managerial personnel and skilled technical workers; to invest in scientific and technological research in order to meet the development requirements of the steel industry.

g/ Investment projects in the 2001-2010 period:

The investment projects in the 2001-2005 period shall be incorporated in the 2001-2005 five-year plan (Appendix I). The investment projects after 2005 are for orientation (Appendix II).

3. The planning�s targets:

a/ The design capacity targets of steel plants (steel cast manufacture, steel rolling and post-rolling processing):

By 2005

By 2010

- Steel cast manufacture

1.5 mil. tons/year

1.8 - 2.0 mil. tons/year

- Steel rolling

4.2 mil. tons/year

6.5 mil. tons/year

- Post-rolling processing

1.0 mil. tons/year

1.6 mil. tons/year

b/ Output targets:

By 2005

By 2010

- Steel cast (unwrought steel)

1.2 - 1.4 mil. tons/year

1.8 mil. tons/year

- Assorted rolled steel

2.5 -3.0 mil. tons/year

4.5 - 5.0 mil. tons/year

- Post-rolling processed products

0.6 mil. tons/year

1.2 - 1.5 mil. tons/year

c/ Investment capital needs:

The total investment capital amount for the development of the steel industry over the next ten years is estimated at about VND 60,000 billion, of which:

+ The 2001-2005 period: About VND 16,000 billion.

+ The 2006-2010 period: About VND 44,000 billion.

Article 2.- A number of mechanisms and policies in support of the materialization of the planning on the development of the steel industry till 2010:

1. The State shall provide supports from the budget capital and ODA capital for the formulation of the industry�s development planning; key projects; develop areas of raw-material iron ore and flux; invest in infrastructural works in the raw material-exploiting areas, new large-scale metallurgical factories, environmental treatment projects; invest in the training and scientific and technological research work of various institutes and schools in the industry.

2. To permit upstream development projects (exploiting iron ores, manufacturing steel cast):

a/ To borrow the State�s development investment credit capital at a preferential interest rate (3%/year) as set out in the Government�s Resolution No. 05/2001/NQ-CP of May 24, 2001. The capital borrowing duration is 12 years and the grace period is three years.

b/ To fall into the investment preference field and enjoy investment preferences under the provisions of the Law on Domestic Investment Promotion.

3. For projects of important significance to the national economy, the Government shall consider to provide guarantee for them to purchase equipment on deferred payment or borrow commercial loans from suppliers or financial institutions inside and outside the country.

4. To permit State enterprises currently engaged in manufacturing steel cast to receive back the capital use levy for a five years� time (2001-2005), regarding it as a State budget grant to the enterprises for upgrading their technical infrastructure and adding to their working capital.

5. The Government encourages enterprises to boost the export of their steel products into potential markets, particularly neighboring and regional countries. The Ministry of Finance shall assume the prime responsibility and coordinate with the concerned agencies in studying in 2001 and submitting to the Prime Minister a policy to support the export of construction steel products.

Article 3.- Organization of implementation

1. The Ministry of Industry shall have to direct the Vietnam Steel Corporation:

- To determine the priority order, the size and location of each new investment project; make in-depth investment in and expand existing establishments; invest in developing mineral raw-material areas in each period; guide investors to finalize their project dossiers.

- To update and adjust in time the planning on the development of the steel industry till 2010; any amendments or supplements to make it suitable to the practical situation must be submitted to the Prime Minister for consideration and decision.

- To organize the information system to assist enterprises to grasp the demands of the domestic and overseas markets.

2. The Ministries of: Planning and Investment; Finance; and Industry; the State Bank of Vietnam and the Development Assistance Fund shall base themselves on their assigned functions and tasks to seek for domestic and foreign capital sources, including concessional ODA loans and FDI, arrange capital sources and lend capital according to annual plans to meet the investment needs of the steel industry.

3. The Ministry of Industry shall assume the prime responsibility and coordinate with the concerned ministries and branches in elaborating financial mechanisms and policies, policies to mobilize various economic sectors to invest in developing the steel industry; perform the uniform management over product standards and quality; and fight trade frauds.

Article 4.- The ministries, branches and People�s Committees of the provinces and centrally-run cities shall implement the planning according to their respective functions and tasks, paying attention to ensuring the uniformity and consistency between the planning on the development of the steel industry and the development plannings of the ministries, branches and localities.

Article 5.- This Decision takes effect 15 days after the date of issuance.

Article 6.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People�s Committees of the provinces and centrally-run cities, the chairman of the Managing Board and director general of the Development Assistance Fund, the chairman of the Managing Board and director general of the Vietnam Steel Corporation shall have to implement this Decision.

Prime Minister
PHAN VAN KHAI

APPENDIX I

LIST OF INVESTMENT PROJECTS IN THE 2001-2005 PERIOD

(Issued together with Decision No. 134/2001/QD-TTg of September 10, 2001 of the Prime Minister)

Ordinal number

Titles of projects and constructions

Investment forms

Design capacity (1,000 tons/year)

Products

Tempo and location

Notes

1

In-depth investment projects in the rolling, Southern Steel Company, Da Nang Steel Company, and technical renovation of Thai Nguyen Metallurgy Company

Self- investment

Cast 500 Rolling 700

Long products

2000-2002 at existing establishments of the Vietnam Steel Corporation

Continuity and new construction

2

Phu My Steel Cold Rolling Plant

Self- investment

205

Cold-rolling bands

2000-2004 in Ba Ria-Vung Tau

Feasibility study report already completed

3

Phu My Steel Plant

Self- investment

Cast 500 Rolling 300

Steel cast and long products

2001-2005 in Ba Ria-Vung Tau

Pre-feasibility study report already completed

4

Northern Steel Plant

Self- investment or joint venture

Cast 500 Rolling 300

Steel cast and long products

2002-2005 in Quang Ninh or Hai Phong

Pre-feasibility study report being made

5

Steel Plate Hot Rolling Plant

Self- investment or joint venture

1,000

Hot-rolling plates and bands

2003-2007

To be continued in next five years

6

Thai Nguyen Metallurgy Plant, Phase 2

Self- investment

300

Long products

From 2002 in Thai Nguyen

Rolling first, carefully studying the metallurgy stage

7

Quy Xa and Thach Khe raw material mines and combined steel factory

Investment preparation

Iron ore for upstream development

2002-2005

Studying and making the feasibility study report, possibly exploiting Quy Xa mine first

8

Non-State steel-rolling projects

Private

About 1,000

Long products

Schemes already completed or being elaborated

APPENDIX II

ORIENTATION ON INVESTMENT PROJECTS IN THE 2006-2010 PERIOD

(Issued together with Decision No. 134/2001/QD-TTg of September 10, 2001 of the Prime Minister)

Ordinal number

Project titles

Investment form

Design capacity (1,000 tons/year)

Products

Tempo and location

Tempo and location

I

Combined steel plant 4.5 mil. tons/year

1.1

Step 1: Hot rolling and cold rolling

Self-investment or joint venture

Hot rolling: 1,500; Cold rolling: 600

Cold- and hot-rolling bands

2007-2010 in Central Vietnam

Pre-feasibility study report already made

1.2

Step 2: Blast-furnace, steel furnace, continuous molding for the first time

Self- investment

2,500

Flat cast

2008-2012 in Central Vietnam

To be continued after 2010

2

Thach Khe mine

Self-investment or joint venture

10,000

Iron ore

2007-2011 in Ha Tinh

To be continued after 2010

3

Special-type steel plant

Self- investment

100

Special steel for mechanical engineering

2006-2008 in the North

Feasibility study report already made

4

VinaKyoei steel cast plant

Joint venture

500

Steel cast

2006-2008 in Ba Ria- Vung Tau

Feasibility study report already made

5

Natural gas-operated spongy iron plant

Joint venture or self- investment

1,400

Spongy iron for use as raw materials for steel metallurgy

Ba Ria- Vung Tau

To continue studying investment capability when conditions permit